Fresh from announcing a $100 million solar fund with utility PG&E last week, solar financier SunRun announced this morning that it’s closed a $55 million Series C round led by VC heavyweights Sequoia Capital and including Foundation Capital and Accel Partners. That list of investors is about as high-profile as it gets for the San Francisco-based startup, which provides homeowners with solar financing options.
The problem with home solar systems is, frankly, they’re expensive, and paying the tens of thousands of dollars upfront to install them on rooftops is a daunting proposition for potential customers. SunRun’s business model is to own, monitor and maintain residential solar panels and offer solar contracts to homeowners where they can pay monthly fees over many years, with little or no upfront fee.
SunRun works with an investor, like US Bancorp or PG&E (s pcg), to set aside a tax equity fund (around $90-$105 million) for a couple thousand planned solar installations. The investor basically buys clean energy tax credits and uses them to shelter otherwise taxable income. It’s no small feat to work with investors to raise these tax equity funds, and in the wake of the investment bank shake-up, solar companies have had to compete for financing from a shrinking pool of tax equity investors once packed with firms like AIG, Lehman Brothers, Wachovia and Morgan Stanley.
SunRun plans to use this latest equity financing to ramp up sales and expand throughout the U.S. Last year the company expanded to Colorado, adding the Centennial State to its existing markets in California, Massachusetts and Arizona. SunRun President and co-founder Lynn Jurich told us last year that the company is looking to enter some of the 10-14 states where “solar will make sense” within the next 2-3 years.
So far SunRun says that its amount of solar customers has grown by more than 400 percent in the past year, and it has completed 4,500 installations. SunRun previously raised $12 million from Foundation Capital and $18 million in second-round financing led by Accel Partners.
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Image courtesy of SunRun.